ALTIA — Earnings Release 2018

Aug 10, 2018

Altia Plc’s Half-Year Report January–June 2018: Continued stable development despite a demanding operating environment

Altia Plc’s Half-Year Report January–June 2018: Continued stable development despite a demanding operating environment

Altia Plc’s Half-Year Report January–June 2018

Continued stable development despite a demanding operating environment

January–June 2018 compared to January–June 2017

· Reported net sales were EUR 160.6 (164.6) million and were impacted by
unfavourable currency development
· Net sales were -2.4% compared to last year and -0.7% excluding currency
impact
· Finland & Exports’ net sales slightly above last year
· Scandinavia’s net sales were at last year’s level in constant currencies
· Net sales in Altia Industrial were below last year’s level
· Comparable EBITDA was EUR 13.8 (13.4) million, which is 8.6% (8.2%) of net
sales
· EBITDA was EUR 9.3 (12.8) million, 5.8% (7.8%) of net sales
· Net debt / comparable EBITDA (rolling 12 months) was 1.8 (0.6)

April–June 2018 compared to April–June 2017

· Reported net sales were EUR 87.1 (91.3) million and were impacted by
unfavourable currency development
· Net sales in constant currencies were -2.8% compared to last year
· The timing of Easter impacts negatively a year-on-year comparison in the
second quarter
· Comparable EBITDA was EUR 8.7 (9.2) million, which is 9.9% (10.0%) of net
sales
· EBITDA was EUR 8.3 (9.0) million, 9.5% (9.9%) of net sales

· Guidance remains unchanged

Important note: This half-year report has been prepared in accordance with the
International Financial Reporting Standards (IFRS) and IAS 34 Interim Financial
Reporting as approved by the EU. The figures in the report are unaudited.

Key figures

+-----------------------------------------------+-----+-----+------+------+-----
-+
| |Q2 18|Q2 17|H1 18 |H1 17 |2017
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Net sales, EUR million
|87.1 |91.3 |160.6 |164.6 |359.0 |
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Comparable EBITDA, EUR million |8.7  |9.2  |13.8  |13.4  |42.4
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|   % of net sales |9.9  |10.0 |8.6  |8.2  |11.8
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|EBITDA, EUR million |8.3  |9.0  |9.3  |12.8  |40.3
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Comparable operating result, EUR million |5.2  |5.6  |6.8  |6.3  |28.2
 |
+-----------------------------------------------+-----+-----+------+------+-----
-+
|   % of net sales |5.9  |6.1  |4.2  |3.9  |7.8
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Operating result, EUR million |4.8  |5.4  |2.3  |5.7  |26.1
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Result for the period, EUR million |3.6  |3.9  |1.7  |4.7  |18.3
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Earnings per share, EUR |0.10 |0.11 |0.05  |0.13  |0.51
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Net debt / comparable EBITDA, rolling 12 months|1.8  |0.6  |1.8  |0.6  |1.1
|
+-----------------------------------------------+-----+-----+------+------+-----
-+
|Average number of personnel |742  |783  |723  |784  |762
|
+-----------------------------------------------+-----+-----+------+------+-----
-+

Reconciliation of alternative key ratios to IFRS figures is presented in the
appendix on page 29.

CEO Pekka Tennilä:

We have had a financially stable first half of 2018. Our profitability improved
in comparison to previous year despite a demanding operating environment with
several external factors affecting Altia’s business, such as the continued
unfavourable currency development as well as cost pressures on key raw
materials.

In January–June reported net sales amounted to EUR 160.6 (164.6) million. Net
sales were impacted negatively by EUR 2.9 million due to the weak Swedish krona
and Norwegian krone, and by lower net sales in the Altia Industrial segment.
Comparable EBITDA was EUR 13.8 (13.4) million.

In the first half of the year, the Finland & Exports segment has grown slightly
driven mainly by the Finnish retail business and exports. The Scandinavia
segment’s net sales were at last year’s level in constant currencies. In total,
the sales of beverages (Finland & Exports and Scandinavia segments together)
grew by 0.5% in constant currencies. Altia’s spirits sales have been impacted
negatively by the generally lower volumes in the retail monopoly in Finland. The
currency impact on the net sales of wine is considerable, but we have been able
to gain market shares in the monopolies overall. In the Altia Industrial
segment, the sales of industrial products are developing positively. However,
lower contract manufacturing volumes due to continued phasing in the second
quarter have decreased net sales. We expect contract manufacturing volumes to
stabilise towards the end of the year.

Altia’s second quarter reported net sales were EUR 87.1 (91.3) million. The main
reasons for the lower net sales in comparison to last year, are the timing of
Easter in Q1 in 2018 and in Q2 in 2017, partner portfolio changes in Sweden, and
the continued unfavourable currency development. The negative currency impact on
net sales in the second quarter was EUR 1.6 million.

Based on Altia’s strategy we focus on our Nordic core brands which are
performing well and growing. Further, we continue building distribution in Asia
for Larsen Cognac and in the US for Koskenkorva Vodka and O.P. Anderson aquavit.
Exports of Koskenkorva Vodka to Russia are progressing well. The addition of the
new partner, Garcia Carrion, and their extensive wine portfolio, has improved
our market position in the Swedish market. Altia’s own wine brand, Chill Out,
has had a good first half of the year. We have revamped the Chill Out design to
further sharpen its position in the market. In the Finnish retail channel, we
have launched Chill Out wine spritzers, and additional launches include a sugar
free Koskenkorva Vichy and a low-alcohol version of Fresita sparkling wine. We
are pleased with our product offering in retail, and we will continue to work
hard to materialise the retail opportunity in Finland.

I am happy to announce that during the summer, Altia entered into a distribution
agreement with the Swedish gin distillery, Hernö Gin. Hernö Gin produces a
variety of craft gins which have been nominated as the world’s best gin several
times. The addition of one of the most aspirational gin brands in the world, as
well as premium craft gins to our offering is the right step in developing our
offering and partner business. The agreement covers the distribution of Hernö
gins in the monopoly markets, the Baltic region and in travel retail. Following
this and the addition of the Garcia Carrion portfolio, we have a considerably
stronger portfolio in Sweden which will help us to mitigate the unfavourable
currency development.

The exceptionally dry and warm summer in Finland is expected to have some impact
on the barley harvest. Despite demanding conditions, the volume forecast from
Natural Resources Institute Finland (Luke) for the barley crop is -13% in
comparison to last year which is far more better than other grain forecasts.
However, the extent of the impact on the yield and quality is to be seen during
the third quarter. In any case, to ensure the efficiency of the Koskenkorva
plant, we are preparing for alternative solutions where possible.

For different businesses we have different pricing mechanisms to take into
account raw material price changes. Naturally in these circumstances, there is
more pressure on pricing in beverages and industrial products, while we will
continue a strict cost control and focus on further efficiency improvements.

Outlook for 2018

Market outlook

The development of the Group’s business operations and profitability are
affected by factors such as the market situation and competitive environment,
economic outlook, imports by consumers and changes in alcohol taxation. The
uncertainty in the eurozone and changes in customers’ buying behaviour are
continuing. There is still significant uncertainty related to the development of
consumer demand. Raw material prices and currencies are expected to remain
volatile.

Seasonality

Sales in the sector are seasonal, with net sales and operating profit generally
being significantly higher in the fourth quarter of the year compared to other
quarters.

Guidance

The positive trend in Altia’s core brand portfolio is expected to continue. Cost
increases in key raw materials and expansion in exports will impact
profitability development. The unfavourable currency impact of the weak Swedish
krona and Norwegian krone is expected to continue.

Guidance as published on 23 February 2018 remains unchanged: The Group’s
comparable EBITDA is expected to improve or be at the 2017 level.

Financial calendar for 2018

Altia will publish the Business Review for January–September on 6 November 2018
at around 8:30 am EET.

Helsinki, 9 August 2018
Altia Plc
Board of Directors

Additional information:

Pekka Tennilä, CEO
Matti Piri, CFO

Contacts:

Analysts and investors: Tua Stenius-Örnhjelm, Investor Relations, tel. +358
40 748 8864
Media: Petra Gräsbeck, Corporate Communications, tel. +358 40 767 0867

Conference call and audio webcast:

Altia will host a conference call and audio webcast for analysts and investors
in English on Friday 10 August 2018 at 11 am EET.

CEO Pekka Tennilä and CFO Matti Piri will present the Half-Year Report, after
which conference call participants will have the opportunity to ask questions.
Presentation material will be made available before the call begins on Altia’s
website at: https://altiagroup.com/investors.

Conference call participants are requested to dial in and register a few minutes
earlier on the following numbers:

-       Finland: +358 981 710 495

-       Sweden: +46 8 566 427 02

-       United Kingdom: +44 203 194 05 52

-       US: +1 855 716 15 97

The conference call can also be followed online. To join the audio webcast,
please go to: https://altia.videosync.fi/2018-08-10-q2

A recording of the audio webcast will be available later at Altia’s website:
https://altiagroup.com/investors

Note:

This is a summary of Altia Plc's Half-Year Report for January–June 2018. The
complete report is attached to this release and is also available on the company
website at https://altiagroup.com/investors.

Distribution:

Nasdaq Helsinki Ltd
Principal media
www.altiagroup.com
Tua Stenius-Örnhjelm
Investor Relations Manager
+358 40 748 8864
tua.stenius-ornhjelm@altiagroup.com
Altia is a leading Nordic alcoholic beverage company operating in the wines and
spirits markets in the Nordic countries, Estonia and Latvia. Altia produces,
imports, markets, sells and distributes both own and partner brand beverages.
The Company also has production in Cognac, France. Further, Altia exports
alcoholic beverages to approximately 30 countries, most of which are in Europe,
Asia and North America. Altia’s own core brands are Koskenkorva, Chill Out,
Blossa, Larsen, O.P. Anderson, Renault, Xanté and Valhalla. Altia’s net sales in
2017 were EUR 359.0 million and the Company employs about 700 professionals.
Altia wants to enhance a modern, responsible Nordic drinking culture.
www.altiagroup.com.

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